Berlin’s decision to lift all caps on military spending and binge on infrastructure marks a U-turn for the fiscally conservative country.

Germany is in for a massive ramp-up in spending under an agreement by the parties hoping to form its next government, with a 500 billion euro special fund sought for infrastructure and plans to unshackle defence investment from its debt rules.

Northern European countries traditionally unenthusiastic about higher spending are wary of Germany’s new-found desire to splash the cash.

Germany’s plan to create a €500 billion ($534 billion) infrastructure fund puts energy grids on track for a massive spending boost after years of underinvestment, part of a broader effort to revolutionize the country’s public finances and jumpstart the economy.

They also said they will seek to set up a €500 billion ($533 billion) fund to finance spending on Germany's often-creaking infrastructure over the next 10 years to restore the e